This is not tax advice, and it computes nothing
GrowIQ Capital is an AMFI-registered mutual fund distributor. It is not a tax adviser, and nothing here is advice about your own position.
Rates and holding periods change with each Finance Act, and a stale rate produces a confident, well-formatted, wrong number. Verify anything below against the current Act, and take your own return to a chartered accountant.
Your return is yours. This page describes how the law treats a class of asset; it does not tell you what you owe.
The holding period is 24 months, not 12
Unlisted equity shares are long-term when held for more than 24 months. This is different from listed equity, where the threshold is 12 months — a point that catches people who assume the equity rule they know applies here.
Held for 24 months or less, a gain is short-term and is taxed at your own slab rate. There is no separate short-term rate for unlisted shares in the way section 111A gives one for listed equity sold on an exchange.
Long-term gains fall under section 112
Long-term capital gains on unlisted shares are taxed at 12.5% without indexation under section 112, for transfers on or after 23 July 2024. Before that date a different regime applied, and a holding sold earlier is governed by the rules of its own time rather than today's.
Section 112A — the listed-equity regime with its ₹1.25 lakh annual exemption — does not apply to a sale of unlisted shares, because that section requires securities transaction tax to have been paid on the sale. There is no exchange and no STT on an off-market transfer.
If the company lists and you later sell on the exchange with STT paid, that sale is a listed-equity sale under section 112A. The period you held the shares before listing still counts towards the holding period.
Other things that are not capital gains
Stamp duty of 0.015% on an off-market transfer is a statutory charge collected through the depository. It is part of your cost of acquisition rather than a tax on a gain.
Unlisted shares are a reportable asset in your income tax return, and holdings must be disclosed whether or not anything was sold in the year. The schedule that applies depends on your residency and the rest of your position.